10-QPeriod: Q2 FY2001

EMCOR Group, Inc. Quarterly Report for Q2 Ended Jun 30, 2001

Filed July 26, 2001For Securities:EME

Summary

EMCOR Group, Inc. reported a solid performance for the second quarter and first half of 2001, demonstrating revenue growth and improved profitability. For the three months ended June 30, 2001, revenues increased slightly to $869.5 million from $866.9 million in the prior year, while net income saw a significant jump to $11.6 million from $9.2 million. This translated to a robust increase in diluted Earnings Per Share (EPS) to $0.81 from $0.68. The six-month period showed even stronger trends, with revenues up 6.1% to $1.71 billion and net income rising to $17.3 million from $14.1 million, leading to a higher diluted EPS of $1.25 compared to $1.08 in the prior year. The company's strategic focus on its electrical construction and facilities services segment, particularly in key US markets, appears to be driving growth. While mechanical services experienced a slight revenue dip, improvements in gross profit margins and operating income reflect effective project management and a favorable mix of contracts. Notably, EMCOR successfully converted its $115 million in convertible subordinated notes, strengthening its balance sheet by eliminating debt. The company ended the period with a healthy cash position and a growing backlog, indicating positive momentum for the remainder of the year.

Key Highlights

  • 1Revenue increased slightly by 0.3% to $869.5 million for the three months ended June 30, 2001, compared to $866.9 million in the prior year. For the six-month period, revenues grew by 6.1% to $1.71 billion.
  • 2Net income for the second quarter rose to $11.6 million ($0.81 diluted EPS) from $9.2 million ($0.68 diluted EPS) in the same period last year. For the first half of the year, net income increased to $17.3 million ($1.25 diluted EPS) from $14.1 million ($1.08 diluted EPS).
  • 3Gross profit margin improved to 10.7% for the quarter (from 9.8% in Q2 2000) and 10.1% for the first half (from 9.8% in H1 2000), driven by contract mix and project management improvements.
  • 4The United States electrical construction and facilities services segment showed strong revenue growth of 9.6% for the quarter and 13.7% for the first half, particularly in major markets.
  • 5EMCOR successfully completed the conversion of its $115 million 5.75% convertible subordinated notes into approximately 4.2 million shares of common stock, significantly reducing long-term debt.
  • 6The company ended the period with a strong cash position of $165.7 million, up from $137.7 million at year-end 2000, supported by positive operating cash flow of $35.9 million for the first half of 2001.
  • 7EMCOR's backlog stood at $2.0 billion at June 30, 2001, up from $1.8 billion at December 31, 2000, indicating a healthy pipeline of future work.

Frequently Asked Questions

EMCOR showed positive performance in both periods. For the three months ended June 30, 2001, revenues were $869.5 million, a slight increase from $866.9 million in 2000, while net income rose to $11.6 million from $9.2 million. This resulted in diluted EPS of $0.81, up from $0.68. For the six months ended June 30, 2001, revenues increased to $1.71 billion from $1.61 billion in 2000, and net income grew to $17.3 million from $14.1 million, with diluted EPS improving to $1.25 from $1.08.

EMCOR called its $115 million of 5.75% convertible subordinated notes for redemption, and they were fully converted into approximately 4.2 million shares of EMCOR common stock. This action eliminated a significant portion of the company's long-term debt, strengthening its balance sheet and reducing future interest expenses.

The United States electrical construction and facilities services segment was a key growth driver, showing substantial revenue increases for both the quarter and the year-to-date. While the mechanical construction and facilities services segment saw a slight revenue decrease, overall gross profit margins improved across the company, indicating better project execution and contract profitability. The UK segment also showed continued growth.

EMCOR's liquidity appears strong. The company's consolidated cash balance increased to $165.7 million as of June 30, 2001. Operating activities generated $35.9 million in cash for the first half of the year, a significant improvement from a net use of cash in the prior year. The company also had available borrowing capacity under its credit facility, leading management to believe it has sufficient resources for its foreseeable liquidity and capital expenditure needs.